We then ranked states from best to worst for each category.Drought: The likelihood of negative economic impacts as a result of drought, the number of people and fresh water sources exposed, and the state's ability to recover or adapt to a future with droughtExtreme heat: Projected number of dangerously hot days by 2050 and the percentage of people vulnerable to dangerously high temperaturesWildfires: Fraction of housing units directly or indirectly exposed to wildfire, as well as wildfire likelihood and home susceptibilityFlooding: Percentage of people living in 100 and 500-year floodplains, projected 30-year increase in number of properties with flood risk, and the percentage of the population living in a 100-year coastal floodplainClimate change preparedness: How well each state is responding to current and future climate change threats

Fewer doors to sell.I would compare loss of revenue to savings in loan.  

Thoughts on (1) biting the bullet and starting the foreclosure process versus (2) waiting it out and trying to sell the property (at a loss)?

This all comes down to how you're structured, how the flip cost were accounted for, if there is a partner (you mentioned "we").If it is an S Corporation and you "distribute" or "sell" the property to yourself, if there is any loss on value, which probably there isn't, know it most likely won't be deductible if it's a related party transaction.  

I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses.

Every turnover will cost you money due to vacancy, Plus you run the risk of additional losses from unpaid rent, cleaning, and repairs.

The original guest loses everything, minus whatever money I recover from a new guest, plus a $100 processing fee.

Flipping can be feasible in one area for years and be a total bust the next year when every project comes in at a loss.

I don't see any reply in this thread as to whether Kenny actually has made money and recovered his initial investment. 

The W-2 income does not limit your deductions.You are entitled to write-off as much as you want.The next question is, is the overall loss considered passive?